VAT understanding for Amazon sellers
Amazon Sellers can be a hard path to navigate. I get a lot of queries about VAT and Amazon. This post to cover to give you as much information as you need. This post will cover UK VAT, distance selling to the EU and Pan European FBA VAT.
If you are an overseas business and you are not based in the EU, then you will need to register for VAT. You have to make a plan to start making sales in the UK. It does not matter what your turnover is? You must register for VAT immediately if you are planning on selling on Amazon in the UK.
If you are considering expanding your Amazon operations into the European market, you have probably heard of Amazon sellers VAT calculation. You would be confused and concerned over VAT and how it will affect your bottom line. VAT may seem a little complicated to newcomers in these markets. They really are not as complex as you think and should not stand between you and your opportunities for growth!
A Few Thoughts on Amazon Seller VAT
Before we get started, here are a few thoughts to keep in mind when you are exploring expanding your Amazon business into the European market:
- VAT is a legal requirement when selling in Europe. You cannot avoid or ignore it.
- Start smaller, sell in only one country, to familiarize yourself with VAT.
- You will need to do a little extra administrative work when selling to European customers.
- Amazon tools, such as FZCO Accountants are available to help and can save you a lot of headaches, time, and errors.
Selling in the EU on Amazon – Distance Selling Rules
Distance selling rules are for those who sell from the UK to another EU country. So, if you sell on Amazon and sell from the UK and do not store your goods in the EU then you will be covered by the distance selling rules.
They have separate thresholds for each EU country. This can be come complicated as you need to monitor your sales to each country over a calendar year. Registering for VAT in a different country can be difficult due to the language and complexity. You normally need to get a professional to help.
Place of supply (Location of goods)
VAT rules are built around where the goods are stored. So, if you are an Amazon Seller from the UK and send the item from the UK, then they are UK sales. If you are based in the UK and sell using FBA, your good may be stored in Germany. If your goods are stored in Germany, then you are subject to German VAT rules (not the distance selling threshold).
Amazon have been stopping people using FBA if they do not give a valid VAT certificate for each country, they store goods in. If you store goods in another country other than your home country then you need to register for VAT in that country. This should put a lot of people off the pan-European amazon fulfilment program. The cost of registering in several countries can be quite high and unless your business will scale quickly you may want to hold off.
Registering and Filing for VAT as an Amazon Seller
The two biggest things to remember about registering for VAT is that you will need a separate registration for each company and that you will need to file VAT returns routinely.
- Amazon VAT Registration: When you register for a VAT you will need to present the necessary paperwork, including a passport, business documents, and administrative paperwork. While it can take two months to receive your government issued VAT number, you can begin selling your products right away using your validity date.
- Amazon VAT Returns: VAT returns are due during different time frames, depending on the country. Germany, for instance, requires monthly returns, while the UK is quarterly. You generally have two weeks to pay before penalties will be assessed. Once you submit the VAT return, you will receive confirmation and pay the bill using a bank transfer.
Even though VAT registrations and returns are not complicated. It still may be advisable to leave the process to professionals to save time, paperwork, and costly errors.
If you think you need to register for VAT in the UK, EU or elsewhere please get in touch with us. We are expert Ecommerce Accountants and understand all aspects of selling on Amazon. Either send us an email or book a free consultation here: Contact us or find out more about us as Amazon Accountants.